The Internal Revenue Service (“IRS”) recently announced a program to encourage employers to reclassify workers who were previously misclassified as independent contractors. Through the Voluntary Worker Classification Settlement Program, companies may voluntarily reclassify independent contractors as employees for future federal employment tax purposes and settle any past payroll taxes on such workers’ compensation. To be eligible for the program, the company must have consistently treated the worker as a nonemployee, filed the required 1099 tax forms for the past three years, and not be under a worker classification audit. Participating companies will be required to pay 10% of the employment tax liability that may have come due on compensation paid to the reclassified workers in the past year – with no interest or penalties due and a guarantee of no employment tax audit of reclassified workers for the prior years. More information about the program and other conditions of participation is available at the IRS website.

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